Comparisons of International Hourly Compensation Costs in Manufacturing

The U.S. Bureau of Labor Statistics reports that national hourly compensation costs in manufacturing increased to $34.74, up 2 percent from 2009. A rate higher than Asia, South and Central America, the U.K. and 19 eastern and southern European countries such as Italy, Spain, and Poland. However, the national rates were lower than Australia, Canada, and many northern and western European countries such as France, Ireland, and Norway. This continues a thirteen year trend of compensation costs improvements relative to all but five countries including Brazil, Japan, Taiwan, Germany, and the Philippines.

Hourly compensation costs are most closely a measure of employee compensation for labor, but do not include all labor costs including such items as employee training, facilities and services, cafeterias, and other employer-supplied costs. The changes in these costs also indicate how a country’s national currency changes its value relative to the United States dollar. Most European countries saw depreciations in their national currencies in relation to the U.S. dollar and so saw declines in (U.S. dollar) hourly compensations costs. Non-European countries, on the other hand, saw significant increases in hourly compensation costs relative to the U.S. dollar.

Directly-paid compensation, such as salary, paid leave time, and periodic bonuses are, on average, higher in Europe than in the United States due to higher leave pay. Japan also offers more direct-paid benefits due to hefty seasonal bonuses which make up a large portion of compensation costs. The other component of compensation costs is social insurance, such as Social Security, Medicare, and unemployment insurance, which is higher in the U.S. than most other countries, excluding places such as Sweden, France, Mexico, and Brazil.

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